Sting in the tail of Gillard charities red tape reduction

Almost every Australian has been involved with, or affected by, a charitable agency at some stage of their lives. Possibly as a recipient of services, or as a donor, volunteer or staff member. Not many Australians know that one in eleven Australians is employed in the charitable and non-for-profit sector and that this sector contributes more than $40 billion to GDP every year.

Given the impact of the sector’s work in the Australian community, last week was an historic one. After 17 year of various inquiries and reviews about an improved regulatory framework for Australian charities, a single national regulatory body for charities was legislated last week. It is the Australian Charities and Not for Profit Commission (ACNC).

This is a positive development for the charitable sector, and for public awareness of its role into the future. At the same time, much hinges on whether the burden of unnecessary administrative compliance required by federal and State governments actually reduces over the next two to three years, and whether the government’s commitment to respect the independence of charities becomes the norm.

In a 2010 pre-election statement, Prime Minister Gillard committed her government to significantly streamline tendering and contracting processes in order “to allow organisations in the sector to spend more time and money focusing on what they do best”. In supporting the creation of the ACNC, charities hope that this commitment will come to fruition.

For the 67 member agencies of Catholic Social Services Australia, seeing red tape reduction occur is vital because virtually all of their funding contracts currently require separate reporting formats, conditions and timetables.

The combined administrative cost of servicing all these separate contracts is prohibitive and duplicative compliance arrangements divert scarce staff resources away from the direct support of clients in need.

Given our current starting point, there is a long way to go before the Prime Minister’s commitment to significant red tape reduction for charities could be realised. However, some steps have been made. One of these is the government’s late agreement to alter the Commonwealth Grant Guidelines so that some areas of duplication in reporting by charities are likely to be reduced.

The absence of federal/state coordination on this matter is a major weakness in any reform process for such a large sector. Even though there is a COAG Working Group seeking to harmonise federal/state arrangements, especially on fundraising and regulation, the outlook for substantial harmonisation is not rosy in the medium term, notwithstanding South Australia’s commitment last week to harmonise on fundraising, some other jurisdictions are a fair way off the new model.

Until and unless all jurisdictions adopt harmonised policies on charity regulation and reporting, it is hard to see how we can make the kind of progress envisage in the 2010 Productivity Commission report on the contribution of the sector or in most of the submissions made to that Inquiry.

An unexpected feature over recent months was the lively political debate about the merits of an ACNC. This included the Coalition’s announcement that it would repeal the ACNC Act if elected next year. However the two recent parliamentary inquiries and the significant amendments obtained by Greens Senator Rachel Siewert have led most in the sector to support this legislation.

That view was encouraged by the government’s recent ‘gag clause’ commitment. This means that no federal agency will be able to link their funding decisions to advocacy or statements by grant recipients, as was the case with the previous government and has become the case under the new Queensland government.

In parallel to this legislative process, and as part of its sectoral reform agenda, the government is pursuing a new charity tax under the guise of ‘better targeting of tax concessions’. Cracking down on cases where the tax concession system is mis-used is the right thing to do. However, the proposed new tax appears to go well beyond this. It would be unfortunate if the pursuit of those mis-using such concessions caused collateral damage to other agencies so that they cut or downsize programs provided to support disadvantaged Australians.

Paul O'Callaghan is Executive Director of Catholic Social Services Australia.

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Existing comments

With government services handed to religious charities to break union power it is time they all paid tax like any other business has to.
The old style bookshops have all but vanished under the weight of charity shops bludging off free work from volunteers and cheap rents from landlords.
ATO income vanishes under the legal rorting of 'slaray sacrifice' while workers are forced to take low wages, which the tax rort is designed to paper over.
If religions want to be businesses then they should accept the 'level playing field' and pay full tax, rates and wages.janice wallace | 07 November 2012

While I don't agree with all that Janice suggests, I do think that it is high time to revisit the peculiar tax environment in which many 'charities' and 'NFPs' operate and the distortions that flow from that environment in terms of depressed wage rates and poor asset utilisation. Hidden subsidies in the form of tax exemptions and neither the most effective nor the most transparent use of public resources.Giner Meggs | 08 November 2012